What Are the Pros and Cons of Using a Credit Card for Home Improvements?

If you don’t have sufficient cash but you want to renovate your home urgently, there are two options at your disposal:

  1. use your credit card
  2. or go the HELOC (home equity loans or line of credit) route.

Unlike credit cards, HELOCs are subject to prevailing interest rates and work best for large renovation projects.

So let’s focus on credit cards.

So, What are the pros and cons of using a credit card for home improvements?

If you can settle the owed money quickly after the renovation project, then your credit card would be a great option. However, it only makes sense that you use a card with a limited-period zero interest rate (promotional interest rate) – you will be shocked with the rewards you will accrue with time. Using cards that can earn you cash back, rewards, and discounts are strongly encouraged as well.

The main setback of credit cards when it comes to home renovation is, unlike your average home equity loan, a credit card will not qualify you for a tax deduction of any kind. Even worse, they could easily lead to unnecessary spending if you fail to set a budget.


1. Convenience and Immediacy

Unlike home equity loans, credit cards ensure you embark on your renovation faster.

And because property values increase quickly sometimes, it only makes sense you complete the renovation faster and put the home on market.

2. Rewards

If you choose to go with a reward credit card, you will receive cash backs and/or points for every dollar you spend on home renovation supplies.

While most people don’t spend solely to get rewards, these rewards ensure you get something back on the money you spend.

3. Perfect for Financing Large Purchases

If you plan to use vast amounts of repair and renovation supplies, the credit card is among the best choices.

Credit cards let the buyer purchase something now and settle for it with time.

Although this comes with a few considerable drawbacks, let’s look on the bright side: imagine you want to do a major renovation on your home that needs lots of materials.

But you realize that you are cash strapped and can’t pay for them at once.

With a credit card, the best thing you can do is to put the bill on your card which will certainly allow you to make urgent purchases immediately and pay over time (but with interest).

4. Building Credit

Using a credit card to make purchases frequently and paying back to your credit card company without delay is one of the sure ways to have positive credit.

For that reason, don’t restrict your credit card to certain kinds of purchases – go ahead and make most purchases with it, including supplies for your home renovation projects.

Positive credit history will eventually boost your credit scores.

These scores can have a big influence on your ability to land a job, get a loan, and even rent an apartment.

5. More pros:

  • Lower credit score requirements
  • Won’t use your house as collateral
  • Promotional rates might mean you will pay zero interest


If you are planning to use your card for renovation purchases, keep in mind these drawbacks:

1. Missed Credit Card Payments Can Be Costly

Missing your payments may mean you are staring at an annual percentage rate (APR) of 21 – 26 percent – this can have undesirable effects on the credit score.

You should actually look for a card with a 0% APR period. You don’t want to end up with late payments.

Late fees can be as high as $40, sometimes more. Chances of ending up a repeat offender are high as well.

2. Large Balances Create Inflexibility

Unless you go for a dedicated or one-purpose credit card for your home renovation expenses, keeping a huge balance on the card can leave very little or no room for flexibility to cater to your day-to-day transactions.

3. The Burden of the Interest

The main reason why many people shy away from credit cards or go slow on them even with a stable source of income is the interest rate.

Just like any other debt, the credit card company requires you to pay back their money with interest which can be a pain for some individuals.

Credit card interest rates are almost always high, meaning the chances of falling into a crippling debt is high especially if you are not careful.

However, the good news is that you can dodge it. Just make sure you pay the full balance every month as agreed – that way, the company won’t charge.

If you maintain a good credit record you may easily qualify for the introductory 0 percent APR period.

But, why would anyone want at APR? It gives you an opportunity to finance large purchases over a long period without interest.

4. There’s Always a Temptation to Overspend

Another problem with credit cards is that they make it too easy to spend money (money you haven’t earned yet, basically).

Unlike hard cash which makes you think twice before making an unnecessary purchase, a credit card removes the emotional attachment you have with your hard-earned money.

And if you don’t have a clear budget laid down, you may blow huge sums of money on items you don’t even need and struggle to repay.

5. Chances Are You Will Damage Your Credit

There’s a significant risk you could end up with a bad credit history hence a low credit score.

Remember that your credit score can determine whether a lender may be willing to trust you with their money.

A low credit score means you are untrustworthy.

So what if you use the card to purchase tons of home renovation supplies, default in payment, and damage your score?

6. More cons

  • Not recommendable if you will need a long period to pay back
  • No tax deductions for the paid interest
  • It may make it a bit hard to pay your contractors (unless they readily accept credit cards)

Bonus question: What Do You Look For When Selecting A Home Repair/Renovation Credit Card?

Do the following:

1. Compare The Interest Rates

Let’s say you are split between HELOC (home equity loans) and credit card – just compare the interest rates between the two.

Before you even settle on the lowest interest, go further and compare the repayment time.

The interest may be small but require a short time to repay which may strain your finances.

Also, just because an interest comes with a longer repayment period doesn’t mean it’s better, you could end up paying several times the principle. HELOCs are known for their low rates.

2. Look for a promotional interest rate offer

 Go for a card with a zero-interest period.

Such a card can help the holder maintain healthy cash flow during the entire renovation time.

It can be a card that permits 0 percent APR on all purchases for a certain or the typical balance transfer card.

However, be sure to calculate the amount of money you will need to pay back to the company every month to erase the balance once their promotional period concludes.

This will help you avoid accumulating interest.

Note that some home improvement stores offer their own branded cards or purchase discounts or near-zero interest financing as well.

Also bear in mind that these cards are designed to offer clients deferred interest deals.

If you fail to pay the full balance before the expiration of the promotional period, these deals may charge interest on your entire purchase amount.

3. Transactions and annual fees

It is almost standard for balance transfer cards to charge transaction fees – often 3 to 5 percent – of your transferred balance. Also, check whether the company charges a yearly fee.


If you want to renovate your home urgently and would like to enjoy the rewards that come with your credit card, you can proceed to use the credit card to pay for your home renovation supplies.

Otherwise, find a better alternative.

Related: Can You Build Equity In A Manufactured Home?